Outlook bleak for affordable housing

Developments with an affordable housing element like the Arboretum will be hard to come by in Santa Monica. (File photo)

CITY HALL ‚Äî¬† City Hall put no money toward affordable housing in the last fiscal year because of the loss of its Redevelopment Agency, according to a report released last week.

That calls into question City Hall‚Äôs ability to keep up with its responsibilities under Proposition R, a 1990 measure passed by voters to ensure that 30 percent of housing produced in Santa Monica be considered “affordable.”

The Proposition R analysis, due out in the next month or so, counts units that have been built as well as those with permits and planning approvals, said James Kemper, a project manager with the Department of Housing and Economic Development.

For the past two fiscal years that have been counted ‚Äî 2009-10 and 2010-11 ‚Äî City Hall has missed the mark, with only 11 and 6 percent of the units completed and in the pipeline considered affordable.

The department releases a separate accounting each year documenting how many units were funded in whole or in part by the Housing Trust Fund, which holds money used to finance affordable housing in the city.

City Hall put none of that money toward affordable housing in the last year, although low production isn‚Äôt completely unusual.

In 2009-10, City Hall only participated in 13 units. The following year, that number bumped up to 38. Earlier in the decade, when City Hall was meeting or exceeding its 30 percent figure, that number topped 100 units.

That could reflect on the forthcoming Proposition R report, Kemper said.

In the past, Housing Trust Fund money has been used to make loans to organizations that build affordable housing, like the Community Corporation of Santa Monica, or to low-income communities like the Mountain View Mobile Home Inn Residents Association.

That loan, forgiven in September 2012, was used to explore a resident purchase of the park, which City Hall ultimately bought for nearly $7 million in 2000.

Santa Monica‚Äôs charter allowed it to build 1,026 affordable apartments in the 2011-12 fiscal year, but the upheaval at the state level that killed the Redevelopment Agency forced city officials to hold back.

The Redevelopment Agency provided the source of 75 percent of the money that went into the Housing Trust Fund, depriving City Hall of its primary source of funds for affordable housing.

Part of the dissolution process also requires the California Department of Finance to review expenses and contracts for the Redevelopment Agency to determine what it will allow under laws passed by the state legislature.

If it deems the money ill-spent, it can demand those funds back, which could impact funding for affordable housing projects already underway in Santa Monica. That includes those under construction and others where land has been purchased, said Andy Agle, director of the Department of Housing and Economic Development in September.

City Hall has found other ways to support the Housing Trust Fund, although none that can reliably replace the Redevelopment Agency.

The City Council sold a property at 1920 Ocean Way to a hotel company for $13.15 million in September, with proceeds targeted for the trust fund. Developers also have responsibility to create or fund affordable housing through the Affordable Housing Production Program.

The program allows developers to build affordable housing in their¬† construction projects, in an off-site location or simply pay a fee. The fee option, created by courts in 2009, can be substantially cheaper than building the units.

With governmental capacity to push its affordable housing policies forward dwindling, the city may have to lean more on private development to reach its goals, Kemper said.

“It‚Äôs not just a development cycle issue now. We don‚Äôt have that financial engine to produce these units,” Kemper said.

One mechanism is the highly-controversial development agreement, a contract between City Hall and a developer that allows the private party to exceed the rules set down by the zoning code in exchange for community benefits.

That could include extra affordable housing, Kemper said.

“That‚Äôs our best opportunity right now to get affordable housing,” he said.